Arbitration/Waiver/CCP 1281.2: Six-Year Delay In Seeking Arbitration Results In Waiver Of Right To Arbitrate

Snippets of the trial court record selected by the Court of Appeal can be very telling. Here, the trial court, troubled by defendants’ claim of delayed discovery of an arbitration agreement, observed: “I guess one of my problems on this case is I have a problem figuring out how nobody knew there was an arbitration agreement for six years. And I think too highly of the law firms involved, frankly, to think that nobody ever asked that question. And of course, I have the business of plaintiff turning over a copy of it . . . They produced a copy of it. For you to argue that that wasn’t enough, I think that’s a hard fact for you guys to get around and I see why you’re trying.” Wolf v. Loring Ward Int’l, Ltd., Case No. B238428 (2nd Dist. Div. 3 Feb. 21, 2013) (Klein, P.J., author 3:0) (unpublished).

The plaintiff, Christine Wolf, sued her financial advisors following her divorce from Dick Wolf, creator of the Law and Order television franchise, claiming defendants “failed to disclose the most significant asset in the marital estate –the vested contractual right to a percentage of income in future licensing of Law and Order and its spinoffs.” Litigation commenced in 2005, and wended its way through federal and state courts.

Basic principles governing waiver of the right to arbitrate are that it is generally a question of fact, the burden of proof is upon the person asserting waiver, and the trial court’s finding, if supported by substantial evidence, is binding on the appellate court.

The bottom line here? “By any standard, the six-year delay in seeking arbitration was egregious.” The trial court’s finding of waiver was supported by substantial evidence, resulting in affirmance of the order denying the motion to compel arbitration.